What Netflix's Turmoil Means for You

The business press (and even the non-business press) has been clucking about the seemingly disastrous third-quarter report delivered Monday by Netflix. The once-dominant movie rental service announced that it had lost 800,000 subscribers this quarter (and has no real plan for how to win them back), predicted that it will lose money for the next few quarters because of the cost of international expansion, and prompted an after-hours sell-off that marked a sharp plunge in value overnight into Tuesday. Those facts aside, it would be mistake to count Netflix out; for all its recent New Coke-style blunders, it's still leading the transition from DVDs to streaming for moviewatchers at home. Even better: its letter to shareholders (PDF) revealed a viable course of action to turn the now-fledgling company around -- though customers who've come to rely on Netflix's vast movie library probably won't be happy.